When it comes to rental levels, Sofia is the cheapest place to rent an office. That fact, along with the great number of well-educated professionals with a good command of foreign languages, makes Sofia an appealing destination for the outsourcing companies. The average rental levels for Sofia offices in the heart of the city is 10.5 Euros/sq.m, while the top offices of class A are rented for 13 Euro/sq.m. Sofia remains one of the fastest growing cities in Europe, according to the London School of Economics and the Bloomberg Foundation.
The difference between the office rental levels in Sofia and in the other capital cities on the Balkan Peninsula is not big, yet the average rent for Sofia is lower than the rental levels that are asked for in the rest of these capital cities. On the top of this rental price rating stays the city of London with the average rental price of 85 Euro/sq.m.
Tsestka Tsacheva, the Bulgarian National Assembly Chairperson, recently made a proposal as part of the closing declaration of the Conference of Speakers of the European Union Parliaments, held in the capital of Italy Rome. According to that proposal, the European Union in its role of defender of the human dignity and the fundamental rights should take serious measures for keeping the external land borders of the EU on the most affected routes.
The Bulgarian National Assembly Chairperson stated that the cooperation between the countries of transit passing should be better and solutions have to be reached concerning the migration processes and the sharing of burden between the countries that are affected by the migration flow. She further confirmed that Bulgaria, being an external border of the EU, is among the most affected member states of the union. In that situation Bulgaria managed to present itself as a responsible partner that behaves as a member of the Schengen Zone, which greatly contributes to the European security. That is why Tsestka Tsacheva stated that there is a need for strengthening the idea about Bulgaria entering the Schengen zone. The Schengen area enlargement will strengthen the borders of the country and will be a signal for the European Union’ unity against the terrorism.
Recently made survey showed the tendencies for the Sofia office market and the expectations that the companies and the investors in this sector have. The researched showed that more than 80 % of the companies expected higher income in 2015 compared to the income a year ago. At the same time 60 % of these outsourcing companies working in Sofia are planning to increase the number of their employees in 2015, as well as to hire larger or more offices in Sofia. Most of these companies mentioned the location, the level of expanses, the parking and the easy access as the most important factors in getting a new office in Sofia.
At the same time the number of the available office premises in Sofia is not seriously increased. There are available offices of class A – yet they are only around 20 000 sq.m in number with rental levels between 10 and 14 Euro/sq.m, depending on the specific requirements of the company. The prognosis is for the outsourcing sector to become the main engine on the office premise market. There are also plans for the re-structuring of existing projects, in order for them to provide excellent office premises of class A.
In an interview for Dark Radio a few days ago, the Bulgarian Deputy PM and Minister of Interior Rumyana Bachvarova stated that Bulgaria is ready for Schengen and sooner or later that entry will become a reality. The Deputy PM further stated that the attitude expressed towards the membership of Bulgaria in the Schengen Area is changing and there is understanding now that Bulgaria is ready to be part of that travel free zone.
Around that time, the Deputy Prime Minister Meglena Kuneva had a meeting in Stockholm with the Morgan Johansson, Justice and Migration Minister of Sweden and Margot Wallström, the Foreign Minister of Sweden. During the meeting were discussed the efforts of Bulgaria to join the borderless area of Schengen. The Deputy Prime Minister of Bulgaria confirmed that Bulgaria relies on the support that Sweden can offer.
After the talks Meglena Kuneva stated that Sweden has committed to support Bulgaria for its Schengen bid in front of the other Nordic countries during the meeting of the European Council in June. Another aim at that meeting was the attraction of investments from Sweden into different projects in northwestern Bulgaria.
Sofia office market had 138 300 sq.m of office transactions in 2014. The net rented offices in Sofia from class A and class B are similar to the ones in 2013. The outsourcing sector showed and still shows positive attitude towards expansion and in fact more than 40 % of the companies asked showed intention for changing their office premise in Sofia for a larger one.
The interest towards the offices in Sofia has been very stable in 2014 and remains such in 2015. There is a serious demand towards the office premises of the highest class A in certain areas in Sofia such as Business Park Sofia, Tsraigradsko Schousse Blvd. and Bulgaria Blvd. The zone near Capital Fort Building is also within the focus of many companies looking for luxurious office premises in Sofia.
Half of the contracts signed concerning offices in Sofia in 2014 were for relocation of companies, 30 % of the contracts were by companies that are expanding their business in Sofia and 10 % from the contracts signed were by companies opening their first office in Sofia. A main engine in the office segment search are international companies working in the IT sector and in the outsourcing sector.
A few weeks ago Kolinda Grabar-Kitarovic, the President of Croatia thanked Bulgaria for the support the country showed for the membership of Croatia in the European Union and NATO. That came as a result from the meeting between the presidents of Bulgaria and Croatia. The two countries keep as priority the accession to the Schengen area of Bulgaria and Croatia. The two countries are now to join efforts in achieving that goal.
Once a political issue, today the accession of Bulgaria into the passport free zone of Schengen is a matter only of meeting the requested technical criteria. In fact, the two presidents agreed that Bulgaria and Croatia have met that criteria a long time ago and are ready to be full members of this travel free zone of Europe. That has been recognized by both the European Commission and the European Parliament.
The two presidents also agreed that the increase in the migratory pressure at the external borders of the EU does require a European solidarity. They also talked about the sharing of burden between the EU member states. The entrance into the Schengen zone of Bulgaria and Croatia will unlock the economic potential of South Eastern Europe and will attract more investments.
According to the Research Report made by Cushman & Wakefield issued in the beginning of 2015 and concerning the office market in Sofia in the previous year, the capital is very stable and the demand towards offices in Sofia is very serious. By the end of last year in Sofia have been completed several projects for office buildings that didn’t add plenty of sq.m to the existing number of office premises, yet that not lead to a serious increase in the number of Sofia offices.
The interest towards the offices in Sofia was concentrated towards offices with great location, with good number of facilities and great transport links. The companies that were driven the office market in Sofia in 2014, are the same which drive the market since the beginning of 2015. These are companies working in the IT sphere, in the outsourcing area, the energetics and in the pharmacology sectors. The number of the rented or purchased office premises in Sofia in 2014 was 154 000 sq.m, which is 40 % more than the previous year.
The rental levels for the offices of class A in Sofia in 2014 and again since the beginning of 2015 vary from 10 to 14 Euros / sq.m. Slight increase in these rental levels for the Sofia offices is expected in 2015. The estimated profits from the rental of the office premises of class A remained stable around 9%.
In an interview with the Bulgarian National Radio (BNR) in April, the Bulgarian Foreign Minister Daniel Mitov said that there is an intention for Romania and Bulgaria to be given a horizon for entering the Schengen area. According to the minister the negotiation about the entering of Romania and Bulgaria into the Schengen zone is a matter of diplomacy. There are several aspects concerning that. One of the most important is the fact that Bulgaria is the external border of the European Union and thus Bulgaria has to have full entrance to the Schengen Information System in order to be fully efficient. If not the country cannot conduct the fight in an efficient way.
Another fact that the Bulgarian Foreign Minister Daniel Mitov stated is that all reports that concern Romania and Bulgaria show certain progress. This means that there have been only positive reports. Yet, no serious developments on the accession issue are in progress. Still, there are positive signals about the intention of the other members of the Schengen zone to start certain allowance of the two countries membership in Schengen, starting at lifting the air borders.
The interest towards top quality offices in Sofia of the highest class A has been seriously increased in the last couple of years. This came as a result from the annual report of the consulting company MBL CBRE. The main reason behind that is the development of the companies in the IT sector and the outsourcing of numerous call centers. At the same time the number of the completed office buildings in Sofia has been reduced in comparison with the year before that.
According to the same report, in the last 12 months, permission for construction has been granted to office building projects in Sofia of up to 36 000 sq.m. in 2014, again half the number of the sq.m. in the building permits in 2013. That serious drop in the figures is a result from the weak interest towards the office buildings during the years of the crisis. Yet, now the things have changed and the rented Sofia offices for 2014 were 88 000 sq.m. In the end of 2014, the number of the available offices of class A and B in Sofia were only 15 %. The most sought after were the office buildings with open-space premises, high-quality of the construction and good, easy to reach location. The rental levels for these offices of high class in Sofia are around 13.5 Euro / sq.m.
Eva Paunova, MEP from the Citizens for European Development of Bulgaria Group said in an interview at Focus News Agency that Bulgaria has a stable government and working reforms. On a conference under the motto ‘My Dream for Bulgaria’ she further stated that Bulgaria has met all the requirements needed for its accession at the Schengen zone. She further stated that the country is in the position to change for better very fast if only all the politicians in Bulgaria work in the same direction and allow the reforms to happen.
In connection with the possible accession of Bulgaria into the Schengen area, MEP Eva Paunova stated that keeping in mind the current situation, Europe needs good security. She also stated that the entry of Bulgaria into the passport free Schengen zone should be a matter of national priority since Bulgaria is a worthy member state of the European Union.
Bulgaria today is seen as a prestigious country with well-educated young people, trained to use the modern technologies. Besides that Bulgaria is a country with very good education and healthcare systems.
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